Opinion
B331561
09-26-2024
GREG MOORADIAN et al., Plaintiffs and Respondents, v. ERLA DOGG INGJALDSDOTTIR et al., Defendants and Appellants.
James A. Shalvoy for Defendants and Appellants. Pitre & Teunisse and Randall J. Pitre for Plaintiffs and Respondents.
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County, No. BC662798 Robert B. Broadbelt, Judge. Reversed with directions.
James A. Shalvoy for Defendants and Appellants.
Pitre & Teunisse and Randall J. Pitre for Plaintiffs and Respondents.
SEGAL, J.
INTRODUCTION
Minarc, Inc. and its principals, Erla Dogg Ingjaldsdottir and Tryggvi Thoersteinsson (collectively, Minarc), and MNM Mod Corp. and its principals, also Ingjaldsdottir and Thoersteinsson (collectively, MNM), appeal from the trial court's order denying their motion to compel arbitration. Minarc and MNM argue the court erred in ruling they waived their right to arbitration. We reverse.
FACTUAL AND PROCEDURAL BACKGROUND
A. The Mooradians Hire Contractors To Construct a New Home
Greg and Debra Mooradian wanted to build a new home. In 2013 they retained Minarc to design it. The contract between the Mooradians and Minarc contained an arbitration provision: "All claims, disputes, and other matters or questions arising out of, or relating to, this agreement or the breach thereof, will be determined by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association [AAA] in Los Angeles, California."
The Mooradians retained MNM to supply certain prefabricated building materials, finishes, and fixtures for the home. This contract also contained an arbitration provision: "[MNM] and [the Mooradians] agree that any and all claims and disputes arising from, or relating to, this contract or the breach thereof, except for claims which have been waived by the making and acceptance of final payment, shall be decided by Arbitration in accordance with the [C]onstruction Industry Arbitration Rules of the [AAA]. This agreement to arbitrate shall be specifically enforceable under the prevailing arbitration laws of Los Angeles County. The award rendered by the arbitrator(s) shall be final, and judgment may be entered upon it in any court having jurisdiction thereof. Any award shall provide for payment within 30 days of the date of the award, including a reasonable provision for payment of attorney fees. Further, any request for arbitration shall be submitted in writing to the other party to the Agreement. The Parties agree to carry on the work and maintain the Project schedule and payments during any arbitration proceedings, unless otherwise mutually agreed in writing."
The Mooradians hired Core Construction and Development Inc. to build the home. This contract, too, contained an arbitration provision: "All disputes hereunder shall be resolved by binding arbitration in accordance with the rules of the" AAA.
B. The Mooradians File This Action and Agree To Arbitrate Their Claims Against Minarc, MNM, and Core in One Arbitration
The project did not go well. The Mooradians sued Minarc, MNM, Core, and three other defendants, asserting causes of action for fraudulent misrepresentation, negligent misrepresentation, and negligence. Shortly after the Mooradians filed their complaint, the Mooradians, Minarc, MNM, and Core stipulated to resolve their disputes in a consolidated arbitration. The stipulation for a consolidated arbitration provided that "all claims, counterclaims and defenses that any party to this Stipulation re Arbitration has against any other party or parties to this Stipulation re Arbitration, jointly or severally, arising from or relating to the agreements attached hereto as Exhibits A, B, and C, including but not limited to the claims made by plaintiffs in the above captioned action against one or more parties to this Stipulation re Arbitration, shall be resolved through binding arbitration conducted as a single proceeding before the American Arbitration Association in accordance with its Construction Industry Arbitration Rules." The exhibits attached to the consolidated arbitration agreement were the Minarc contract (Exhibit A), the MNM contract (Exhibit B), and the Core contract (Exhibit C).
The parties further agreed that, "by entering into this Stipulation re Arbitration no party hereto is waiving or releasing any claims, counterclaims or defenses against any other party, person or entity, except that all parties to this Stipulation re Arbitration agree that the claims of plaintiffs against the defendants named herein who are party to this Stipulation re Arbitration shall be resolved through binding arbitration conducted under the auspices of the American Arbitration Association in accordance with its Construction Industry Arbitration Rules." The trial court signed the consolidated arbitration agreement and stayed the proceedings regarding the signatories to the agreement.
In November 2017 the Mooradians initiated the consolidated arbitration with the AAA and paid their fees in full. Minarc and MNM also paid their fees in full. Core, however, refused to pay its fees in full. In addition, Core brought claims in the consolidated arbitration against several subcontractors, all of whom also refused to pay their fees. The AAA terminated the consolidated arbitration in September 2019 for nonpayment of these fees.
We refer to Core and the subcontractors Core added to the arbitration collectively as the Core parties.
C. The Trial Court Lifts the Stay; Minarc and MNM Appeal and Then Move To Compel Arbitration
In July 2020 the Mooradians moved in the trial court to lift the arbitration-related stay and to resume litigating their claims in court. Minarc and MNM opposed the motion and asserted that they had complied with all the arbitration requirements and that there had been no arbitration on the merits. They argued that neither the Core parties' failure to pay their arbitration fees nor the Mooradians' failure to advance the Core parties' delinquent fees deprived Minarc and MNM of their rights to arbitrate their disputes with the Mooradians. In December 2021 (yes, a year and a half after the Mooradians filed the motion to lift the stay) the court granted the motion and lifted the stay.
In January 2022 Minarc and MNM appealed from the trial court's order granting the Mooradians' motion to lift the arbitration stay. A few months later, Minarc and MNM filed a motion to stay the trial court proceedings under Code of Civil Procedure section 916, which imposes an automatic stay upon perfecting an appeal. In late October 2022 the trial court denied the motion, ruling Minarc and MNM had not perfected their appeal because the order lifting the arbitration stay was not an appealable order.
On November 10, 2022 (and before this court dismissed the appeal from the order lifting the arbitration stay) Minarc and MNM moved to compel arbitration under Code of Civil Procedure section 1281.2 based on the arbitration provisions in the Minarc and MNM contracts. Minarc and MNM argued that they vigorously pursued their rights to arbitrate all of the Mooradians' claims in the consolidated arbitration, as well as in their failed appeal, and that therefore they had not waived their right to arbitrate.
The Mooradians argued in opposition to the motion Minarc and MNM waived their right to arbitrate by failing to cure the fee default in the consolidated arbitration and again by bringing their motion to compel arbitration more than three years after the AAA terminated the consolidated arbitration. The Mooradians also asserted, for the first time, they were entitled to rescind the Minarc and MNM contracts (and their arbitration agreements) because both contracts were illegal. Finally, the Mooradians argued that they should not have to arbitrate their claims against Minarc and MNM because the Mooradians also had claims against Core and other defendants based on the same series of transactions and that resolving some of the claims in arbitration and others in court could lead to conflicting rulings.
In reply Minarc and MNM argued that California law strongly favors arbitration and that they had not yet arbitrated their disputes with the Mooradians on the merits. On the issue of delay, Minarc and MNM argued they did not unreasonably delay in bringing their motion to compel arbitration because the court did not lift the arbitration stay until more than two years after the AAA terminated the consolidated arbitration proceeding and Minarc and MNM immediately appealed that ruling. Minarc and MNM also argued that their contracts with the Mooradians were not illegal and that, even if they were, the Mooradians had not sought, even in their complaint, to rescind the contracts.
D. The Court Denies the Motion To Compel Arbitration, and Minarc and MNM Appeal
The court denied the motion to compel arbitration. As an initial matter, the court found the Minarc contract and the MNM contract were valid and enforceable agreements to arbitrate. The court also recognized a party may waive its right to arbitrate by taking actions inconsistent with that right. Citing Cinel v. Barna (2012) 206 Cal.App.4th 1383 (Cinel), the trial court ruled Minarc and MNM waived their rights to arbitrate because they refused to pay the Core parties' unpaid arbitration fees. The court found Minarc and MNM "acted 'inconsistent with the right to arbitrate'" because they "repudiated the arbitration agreement by refusing to reach an agreement over the payment of fees, including by paying the delinquent fees of the nonpaying parties pursuant to AAA's suggestion."
Minarc and MNM appealed from the order denying their motion to compel arbitration. The Mooradians subsequently dismissed with prejudice their claims against all named defendants except Minarc and MNM.
DISCUSSION
A. Governing Law and Standard of Review
A trial court may deny a petition to compel arbitration where the "right to compel arbitration has been waived by the petitioner." (Code Civ. Proc., § 1281.2, subd. (a).) Interpreting this statutory provision, courts used to discuss "waiver" in broad (and often imprecise) terms. For example, in St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187 (St. Agnes) the Supreme Court stated: "In the arbitration context, '[t]he term "waiver" has . . . been used as a shorthand statement for the conclusion that a contractual right to arbitration has been lost.'" (Id. at p. 1195, fn. 4, overruled in part in Quach v. California Commerce Club, Inc. (2024) 16 Cal.5th 562 (Quach); see Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307, 315 ["The confusion engendered by the multiple meanings of 'waiver' is not new."]; Semprini v. Wedbush Securities Inc. (2024) 101 Cal.App.5th 518, 526 ["'While "waiver" generally denotes the voluntary relinquishment of a known right, it can also refer to the loss of a right as a result of a party's failure to perform an act it is required to perform, regardless of the party's intent to relinquish the right.'"].)
In addition, for many years California courts have considered various factors in determining whether a party waived its right to arbitration through its litigation conduct. These factors include "(1) whether the party's actions are inconsistent with the right to arbitrate; (2) whether the litigation machinery has been substantially invoked and the parties were well into preparation of a lawsuit before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place; and (6) whether the delay affected, misled, or prejudiced the opposing party." (St. Agnes, supra, 31 Cal.4th at p. 1196, quotation marks omitted, brackets in original; see Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 375 (Iskanian), overruled on another ground in Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639 and in part in Quach, supra, 16 Cal.5th 562.) In addition to making a showing on these factors, the party opposing arbitration had to show prejudice. (Quach, at p. 573; St. Agnes, at p. 1203.)
But the law changed. In Quach the Supreme Court eliminated the prejudice requirement and made California arbitration law consistent with federal law. (See Quach, supra, 16 Cal.5th at p. 582 ["Because the state law arbitration-specific prejudice requirement finds no support in statutory language or legislative history, we now abrogate it."]; see also Morgan v. Sundance, Inc. (2022) 596 U.S. 411, 418 [Federal Arbitration Act does not authorize courts to create an arbitration-specific prejudice requirement].) The Supreme Court in Quach also clarified several points relevant to this appeal. First, the St. Agnes factors are relevant considerations in evaluating a party's litigation conduct, not a multifactor test. (See Quach, at p. 584 ["Courts should not apply the St. Agnes factors as a single multifactor test for determining whether the right to compel arbitration has been lost through litigation."].) Second, waiver in the arbitration context means the same as waiver in contract law generally: the intentional relinquishment of a known right. (Id. at p. 584.) Third, "a court should separately evaluate each generally applicable state contract law defense raised by the party opposing arbitration," such as waiver, forfeiture, estoppel, timeliness, and "not lump distinct legal defenses into a catch-all category called 'waiver.'" (Id. at pp. 583-584.) Finally, and of particular significance here, the Supreme Court affirmed the rule a party may lose the right to arbitrate through forfeiture, including by failing to assert the right to arbitrate in a timely manner. (Id. at p. 583, citing Chase v. Blue Cross of California (1996) 42 Cal.App.4th 1142, 1151 [forfeiture] and Wagner Construction Co. v. Pacific Mechanical Corp. (2007) 41 Cal.4th 19, 30 (Wagner Construction) [timeliness].)
We gave the parties an opportunity to file supplemental briefs on the Supreme Court's decision in Quach.
This appeal concerns both waiver and forfeiture. "To establish waiver under generally applicable contract law, the party opposing enforcement of a contractual agreement must prove by clear and convincing evidence that the waiving party knew of the contractual right and intentionally relinquished or abandoned it." (Quach, supra, 16 Cal.5th at p. 584.) Similarly, because forfeiture of contractual rights is disfavored, the party asserting forfeiture has the burden to establish forfeiture by clear and convincing evidence. (Civ. Code, § 1442; Chase v. Blue Cross of California, supra, 42 Cal.App.4th at p. 1157.) "Under the clear and convincing evidence standard, the proponent of a fact must show that it is 'highly probable' the fact is true." (Quach, at p. 584.) We review the trial court's findings regarding waiver and forfeiture to "determine whether the record, viewed as a whole, contains substantial evidence from which a reasonable trier of fact could have made the finding of high probability demanded by this standard of proof." (Conservatorship of O.B. (2020) 9 Cal.5th 989, 1005.)
B. Minarc and MNM Did Not Forfeit Their Rights To Arbitrate by Failing To Pay the Core Parties' Fees
The trial court ruled Minarc and MNM waived their rights to arbitrate their disputes with the Mooradians by failing to pay the Core parties' delinquent arbitration fees in the consolidated arbitration. After the Supreme Court's decision in Quach, the more appropriate description of the trial court's ruling is forfeiture, not waiver. Either way, the court erred.
A party may forfeit its right to arbitrate by failing to perform a required act. (See Quach, supra, 16 Cal.5th at p. 583.) In Cinel, supra, 206 Cal.App.4th 1383, the case the trial court relied on, the court held a party may forfeit the right to arbitrate by failing to pay another party's share of arbitration fees. There, a contract between the plaintiff and six defendants required the parties to arbitrate their disputes. (Id. at pp. 1386, 1387, fn. 5.) The plaintiff and two defendants agreed to pay their pro rata shares of the arbitration fees, but the remaining defendants refused to pay their shares. (Id. at p. 1387.) The parties could not agree on how to pay the rest of the fees, and the arbitrators terminated the arbitration for nonpayment of fees. (Ibid.) After the trial court "reasserted jurisdiction" over the case, one of the defendants moved to compel arbitration. The trial court denied the motion to compel. (Id. at pp. 1388-1399.) The court in Cinel affirmed, concluding that, "by refusing to agree among themselves to pay the fees of the nonpaying parties, both plaintiff and [the moving] defendant" forfeited (we would say now under Quach) their rights under "the arbitration agreement by their collective and simultaneous repudiation of it through their refusal to reach an agreement as ordered by the arbitrator over the payment of fees." (Id. at p. 1390.)
The trial court here erred in relying on Cinel to conclude the failures by Minarc and MNM to pay the Core parties' fees in the consolidated arbitration forfeited Minarc's and MNM's rights to arbitrate their disputes with the Mooradians. In Cinel the arbitrators and the trial court ordered the parties to allocate the defaulting parties' share of the fees among themselves, and the trial court construed their failure to do so as a repudiation of their contract. Neither the AAA nor the trial court made such an order here. Moreover, unlike in Cinel, here there were multiple arbitration agreements. The only agreement Minarc, MNM, Core, and the Mooradians were all parties to was the consolidated arbitration agreement. If Minarc and MNM (and the Mooradians, for that matter) had any obligation to pay the Core parties' delinquent fees, that obligation arose from the consolidated arbitration agreement, not from the Mooradians' individual contracts with Minarc and MNM. If the parties' collective failure to pay the Core parties' arbitration fees repudiated, waived, or forfeited anything, it was the right to arbitrate under the consolidated arbitration agreement, not the right to arbitrate under the contract between the Mooradians and Minarc or the contract between the Mooradians and MNM.
C. Minarc and MNM Did Not Forfeit Their Rights To Arbitrate by Unreasonably Delaying in Bringing Their Motion To Compel Arbitration
The Mooradians argued in opposition to the motion to compel arbitration that Minarc and MNM also waived their rights to arbitrate because they unreasonably delayed bringing their motion to compel. Although the trial court did not reach this issue, the Mooradians argue we may affirm the court's order on this alternative ground. As a matter of appellate procedure, the Mooradians are correct: We may affirm an order on a ground presented to the trial court. (W. Bradley Electric, Inc. v. Mitchell Engineering (2024) 100 Cal.App.5th 1, 11.) But they are wrong on the merits: Minarc and MNM did not unreasonably delay asserting their arbitration rights.
A party may lose the right to arbitrate by unreasonably delaying in asserting that right. (Quach, supra, 16 Cal.5th at p. 584; see Iskanian, supra, 59 Cal.4th at p. 376 [in analyzing whether a litigant's actions were consistent with the right to arbitrate, a court may consider "whether a delay was 'unreasonable'"]; Wagner Construction, supra, 41 Cal.4th at p. 30 [where no statutory or contractual deadline applies, a party must assert the right to arbitrate within a reasonable time].) The length of the delay, however, is not the only consideration. (See Wagner Construction, at p. 30 ["'[w]hat constitutes a reasonable time is a question of fact, depending upon the situation of the parties, the nature of the transaction, and the facts of the particular case'"]; Leger v. R.A.C. Rolling Hills, LP (2022) 84 Cal.App.5th 240, 246 [same]; Law Offices of Dixon R. Howell v. Valley (2005) 129 Cal.App.4th 1076, 1100 ["the existence or absence of a reasonable explanation for the party's delay" in asserting its right to arbitrate is relevant to forfeiture].) A party may also lose the right to arbitrate by requesting arbitration after actively litigating the case. (See Quach, supra, 16 Cal.5th at pp. 586-587 [defendant's 13-month delay in asserting the right to arbitrate, along with actively participating in litigation, waived the defendant's right to arbitrate]; Sprunk v. Prisma LLC (2017) 14 Cal.App.5th 785, 798 ["An attempt to gain a strategic advantage through litigation in court before seeking to compel arbitration is a paradigm of conduct that is inconsistent with the right to arbitrate."].)
The delay by Minarc and MNM was not unreasonable under the circumstances. Although the Mooradians correctly point out that more than three years elapsed between when the AAA terminated the consolidated arbitration and when Minarc and MNM filed their motion to compel arbitration, most of that delay was either not attributable to Minarc and MNM or is reasonably explained. The AAA terminated the consolidated arbitration on September 20, 2019. None of the parties took any action until July 7, 2020, when the Mooradians filed their motion to lift the arbitration stay. The court did not rule on the motion until December 16, 2021-more than 17 months later. The delay relating to the Mooradians' motion was not attributable to Minarc or MNM and, in any event, Minarc and MNM could not have filed a motion to compel arbitration until the court lifted the stay.
After the trial court lifted the stay on December 16, 2021, Minarc and MNM attempted (albeit not always effectively) to preserve their rights to arbitrate. On January 13, 2022 Minarc and MNM appealed from the court's order lifting the stay. The appeal, while misguided (because it was from a non-appealable order), reflected the desires of Minarc and MNM to resolve their disputes with the Mooradians in arbitration. Nothing in the record suggests Minarc and MNM sought to obtain a strategic advantage while their appeal was pending from January 13, 2022 to November 14, 2022, when this court dismissed the appeal. Moreover, Minarc and MNM filed their motion to compel arbitration only 14 days after the trial court ruled the order lifting the arbitration-related stay was not appealable-even before this court dismissed the appeal. And none of the parties took any steps to litigate their claims-such as conducting discovery or filing dispositive motions-in the trial court before Minarc and MNM moved to compel arbitration. (See St. Agnes, supra, 31 Cal.4th at p. 1196 [court may consider whether important intervening steps, such as taking advantage of discovery not available in arbitration, have taken place, whether "'the litigation machinery has been substantially invoked,'" and whether the parties "'were well into preparation of a lawsuit'" before a party expressed an intent to arbitrate].)
D. The Mooradians' Argument Minarc and MNM Waived Their Rights To Arbitrate by Signing the Stipulation for a Consolidated Arbitration Is Forfeited and Meritless
The Mooradians argue Minarc and MNM "explicitly waived" their rights to arbitrate in any forum other than the consolidated arbitration proceeding. The Mooradians, however, have doubly forfeited this argument.
First, they did not raise it in the trial court. As discussed, in opposition to the motion to compel arbitration, the Mooradians argued that Minarc and MNM waived their rights to arbitrate by failing to cure the fee default in the consolidated arbitration and that Minarc and MNM waived their arbitration rights by bringing their motion to compel arbitration more than three years after the AAA terminated the consolidated arbitration. What the Mooradians did not argue, and what they argue for the first time on appeal, was that Minarc and MNM waived their rights to arbitrate under the Minarc and MNM contracts by agreeing to participate in a consolidated arbitration proceeding with the Core parties. Thus, the Mooradians forfeited this argument by failing to raise it in the trial court. (See Cook v. University of Southern California (2024) 102 Cal.App.5th 312, 325 [defendant forfeited an argument in support of enforcing an arbitration agreement by failing to raise it in the trial court].)
Second, they did not sufficiently brief the argument on appeal. (See Hernandez v. First Student, Inc. (2019) 37 Cal.App.5th 270, 277 ["'When an appellant raises an issue "but fails to support it with reasoned argument and citations to authority,"'" the argument is forfeited]; Public Employment Relations Bd. v. Bellflower Unified School Dist. (2018) 29 Cal.App.5th 927, 939 [appellant forfeits an argument by failing to provide "cogent legal argument or citation to authority"]; Allen v. City of Sacramento (2015) 234 Cal.App.4th 41, 52 ["[w]hen legal argument with citation to authority is not furnished on a particular point, we may treat the point as forfeited"].) In their discussion of Cinel the Mooradians selectively quote the consolidated arbitration agreement, emphasizing with italics that "all claims, counterclaims and defenses . . . jointly or severally, arising from or relating to the agreements attached hereto as Exhibits A, B, and C, . . . shall be resolved through binding arbitration conducted as a single proceeding . . . ." They then assert, without analysis or explanation, Minarc and MNM "explicitly waived their right to . . . separate arbitration proceedings" under the Minarc and MNM contracts. The Mooradians do not explain how the court could reasonably construe the italicized language as a waiver of the right to arbitrate in any forum other than the consolidated arbitration with the Core parties. And they do not cite any legal authority or provide any relevant, cogent legal analysis.
In any event, the argument lacks merit. As stated, a "party opposing enforcement of a contractual agreement must prove by clear and convincing evidence that the waiving party knew of the contractual right and intentionally relinquished or abandoned it." (Quach, supra, 16 Cal.5th at p. 584.) There is no such evidence here. The terms of the consolidated arbitration agreement do not establish the parties intended, by agreeing to participate in a consolidated arbitration proceeding, to surrender their rights to arbitrate everywhere else or under all arbitration agreements. The provision cited by the Mooradians is at best ambiguous on that point. For example, the agreement to arbitrate in "a single proceeding" could mean, as the Mooradians argue, "only in a joint proceeding with the Core parties to the exclusion of any contractual right to arbitration in another forum." But it could also mean, as Minarc and MNM argue, "jointly for the purpose of administrative convenience but without waiving the contractual right to arbitrate in another forum." And the record does not contain any extrinsic evidence to support the Mooradians' desired interpretation. (See Duran v. EmployBridge Holding Company (2023) 92 Cal.App.5th 59, 67-68 [a party asserting a mutual understanding regarding the meaning of ambiguous contract terms should submit extrinsic evidence to show the understanding was communicated between the parties].) And other terms of the consolidated arbitration agreement-for example, the parties' express reservation of defenses that would include the right to arbitrate-suggest the parties did not intend to forfeit any substantive rights under their contracts with the Mooradians by agreeing to a consolidated arbitration proceeding. (See Sargon Enterprises, Inc. v. Browne George Ross LLP (2017) 15 Cal.App.5th 749, 768 [a party "seeking to enforce a contractual arbitration clause must file the section 1281.2 petition in the action at law (or raise it as an affirmative defense in the answer)" to avoid forfeiting the right to arbitrate].)
E. The Mooradians Waived Their Right to Rescission
A court may deny a motion to compel arbitration if there are grounds to rescind the arbitration agreement. (§ 1281.2, subd. (b).) The Mooradians argued in opposition to the motion to compel arbitration there were grounds to rescind the Minarc contract and the MNM contract. The trial court did not reach this issue. The Mooradians ask that, if we reverse the order denying the motion to compel arbitration, we direct the trial court to rule on whether the Minarc contract and the MNM contract are illegal. We decline to do so.
As stated, we could affirm the court's order denying the motion to compel arbitration on an alternative ground argued in the trial court and supported by the record. The Mooradians, however, do not suggest we could do so on the existing record. They seem to acknowledge that, because of evidentiary rulings by the trial court they do not challenge, the evidence does not support their rescission argument. Regarding the MNM contract, the Mooradians argue the products supplied by MNM did not comply with regulations governing labeling on foam and foam building systems. But the only evidence the Mooradians offered to support that claim, Debra Mooradian's declaration, was insufficient. Debra stated that she observed bar codes sprayed on prefabricated foam panels supplied by MNM that, to "the best of [her] knowledge, . . . convey[ed] no useful information" and that she "suspect[ed]" were provided "to give the impression that these prefabricated foam panels had been approved by some governmental entity." She also stated she "reviewed many of the panels and did not at any time see any approving mark by the City of Los Angeles or any other governmental entity." She did not, however, state that she had any particular knowledge of the labeling requirements in the applicable regulations or that she had any experience with the type of labels required in the industry. Debra's speculation about the meaning of certain labels, which was based on a partial inspection of materials provided by MNM, would not have allowed the trial court to rescind the MNM contract.
DISPOSITION
The order denying the motion to compel arbitration is reversed. The trial court is directed to enter a new order granting the motion to compel arbitration. Minarc and MNM are to recover their costs on appeal.
We concur: MARTINEZ, P. J. FEUER, J.